My Wife Hid Massive Debt, Now What?

Recently, I discovered that my wife secretly kept and used credit cards over the last several years. I also found out there are two liens on our home from some of this debt. She was hiding the mail from me so I wouldn’t find out. I’m angry about the dishonesty, but I want us to get the debt cleaned up. What do you suggest?

-Tom

Dear Tom,

This debt and the liens are a symptom. What we’re looking at here is a repeated pattern of lying and deception. Anyone can become scared or ashamed and make a mistake, but this has happened several times. It’s called financial infidelity for a reason. Really, it’s the same kind of lying as sexual infidelity. It hurts and makes people angry on a lot of the same levels, and that’s because it’s a broken trust.

Assuming that you guys can talk things out and heal this rift in your marriage, you’re going to have to contact these credit card companies and try to settle the debts. You guys aren’t bringing home a lot, so you need to start scratching together every nickel and dime you can and make an offer to erase these debts. That will also remove the liens on your home. Many times creditors will settle a debt for pennies on the dollar. If you’re lucky, you may be able to get them to accept about 25% of the amount owed.

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But I think you’ve got a much bigger problem here. You guys have some serious issues that need to be resolved. I’d advise going to your pastor, if you’re in a good church, or finding a reputable marriage counselor. Your wife needs to understand, loud and clear, that this kind of crap has to stop immediately!

-Dave

Dear Dave,

What happens to a vehicle if the co-signer on the loan files bankruptcy?

-Robert

Dear Robert,

First, it means that only the co-signer has gone bad. The car is still in your name, and the loan is still in your name. If you were to notify the bank of this, and that you’d be keeping the car and still making the payments on time, then you shouldn’t have a problem. It also wouldn’t affect your credit score. Just because you partnered with someone who failed with money doesn’t mean you’re going to do the same thing.

There is one thing to keep in mind, though. It may show up on your credit bureau report that the loan has gone into bankruptcy. It shouldn’t indicate that you have gone into bankruptcy, just the loan. That much is true, since your co-signer filed bankruptcy. Still, this shouldn’t damage your credit score.

If it does, just stay on top of things, and report what has happened to the credit bureau. Your credit score should not be affected by something you didn’t do, as long as the loan involved is paid on a timely basis.

-Dave

* Dave Ramsey is America’s most trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.